2002 (10) TMI 714 - AT - Customs

Summary

Issues Involved:
1. Inclusion of freight paid for Daughter Vessel in the assessable value for Customs duty.
2. Time-barred nature of the demand for differential duty.
3. Imposition of penalties under Sections 114A and 112 of the Customs Act.
4. Chargeability of interest under Section 28AB of the Customs Act.

Issue-wise Detailed Analysis:

1. Inclusion of Freight Paid for Daughter Vessel in Assessable Value:
The primary issue is whether the freight paid for the deployment of the Daughter Vessel, which carried imported goods from Chennai/Vishakhapatnam Port to Haldia/Budge Budge Port, should be included in the assessable value for Customs duty. The Appellants argued that the run by the Daughter Vessel was a continuation of the Mother Vessel's journey and that the freight was already included in the assessable value. They cited various judicial decisions to support their claim that the Daughter Vessel's journey should be treated as a foreign run and a continuation of the Mother Vessel's journey. However, the Revenue contended that the total freight paid, including the Daughter Vessel's freight, should be included in the assessable value. The Tribunal agreed with the Revenue, stating that the total freight incurred for both vessels is the actual cost of transport from the foreign port to the place of importation, as per Rule 9(2) of the Customs Valuation Rules. The Tribunal upheld the demand for Customs duty, noting that the deployment of Daughter Vessels was a regular occurrence and not an extraordinary situation.

2. Time-barred Nature of the Demand for Differential Duty:
The Appellants contended that the demand for differential duty was time-barred as it fell beyond the period of six months. They argued that all primary facts were disclosed to the appropriate authority and there was no misrepresentation or willful suppression of facts. The Tribunal, however, agreed with the Revenue that the extended period of limitation was invokable as the fact of not including the transport cost of the Daughter Vessel was not disclosed to the Department. The Tribunal cited the Supreme Court's decision in the case of BPL India Ltd. v. CCE, Cochin, to support the invocation of the larger period of limitation.

3. Imposition of Penalties under Sections 114A and 112 of the Customs Act:
The Commissioner had imposed a penalty under Section 114A, equal to the amount of duty, and an additional penalty of Rs. 10 lakhs under Section 112 of the Customs Act. The Appellants argued that no penalty was imposable as there was no intention to evade duty. The Tribunal agreed that a penalty equal to the amount of duty under Section 114A was not warranted in this case. Instead, the Tribunal imposed a reduced penalty of Rs. 1 crore. The Tribunal also set aside the penalty of Rs. 10 lakhs imposed under Section 112.

4. Chargeability of Interest under Section 28AB of the Customs Act:
The Commissioner had also demanded interest under Section 28AB of the Customs Act. The Tribunal did not specifically address this issue in detail but upheld the demand for Customs duty and the imposition of a reduced penalty, implicitly supporting the chargeability of interest as per the provisions of the Act.

Conclusion:
The Tribunal upheld the demand for Customs duty, agreeing with the Revenue that the freight paid for the Daughter Vessel should be included in the assessable value. The extended period of limitation was deemed applicable due to non-disclosure of the Daughter Vessel's transport cost. The penalty under Section 114A was reduced to Rs. 1 crore, and the penalty under Section 112 was set aside. The appeal was disposed of accordingly.